Our Strategy Letters are published every 2 months. They focus on BearingPoint’s convictions about operational strategy issues, ranging all the way from the position of Purchasing directors in companies to how to best face decline in key markets. The tone is meant to be pleasant and the content innovative.

Large diversified companies are an essential base of our Western economy. For many of them, the fundamental problem is no longer how to handle rapid growth but rather managing their large size. There is a fine line between competent maturity on the one hand, and senility on the other; ossification lurks and the worrying symptoms of the ageing company often jump out for the external observer.

The life and death of famous companies such as Montedison, AEG-Telefunken, British Leyland/MG Rover, A&P, have all the allure of the classic film noir. The scenarios are always similar, against a backdrop of a sort of Titanic bustling about its business but with death waiting in the wings. While heaven can wait, economic reality cannot tolerate the same twists and turns, such as over-investment around the “cash cow”, attempts at diversification aborted by excessive prudence, a sleepy management for whom the bell has tolled but which has yet to experience the sickening terror of liquidation or a government bail-out…

While there is never any guarantee of a happy ending, the empire can strike back by redeploying under-used resources and listening to the market. Finally, hero managers with charismatic personalities can bring back their lust for life…